The Wall Street Journal reported on July 24, 2026, that Apple and Micron have been making conflicting appeals to the Trump administration over Chinese-made memory chips. Apple wants to use chips from ChangXin Memory Technologies (CXMT) and Yangtze Memory Technologies (YMTC) in products sold outside the United States, aiming to ease a global supply shortage and rising prices. Micron opposes this, arguing that it would weaken the US memory industry regardless of where the products are sold.
The two companies' arguments approach the same supply shortage from different timeframes. The rising component costs Apple has disclosed are already a problem that could pressure its earnings. Meanwhile, the domestic US production expansion that Micron proposes as an alternative will continue through 2035, and Micron itself expects supply-demand tightness to persist beyond 2027. The administration must decide how to balance sourcing options that would ease current prices against future domestic production capacity.
Scope of Adoption Shifts Between China-Bound and Non-US Markets
The WSJ report described Apple's proposal as involving the use of Chinese-made memory in "products sold outside the United States." CEO Tim Cook and others reportedly made the proposal to President Donald Trump, Commerce Secretary Howard Lutnick, and Treasury Secretary Scott Bessent. On Micron's side, CEO Sanjay Mehrotra and others reportedly contacted Lutnick and others, warning that allowing Chinese companies into the market would deal a blow to the domestic memory industry similar to what US steel and manufacturing industries experienced. Both accounts come from the WSJ's sourcing based on people familiar with the matter, and neither Apple nor the administration has publicly confirmed any procurement approval or contract.
There remains an unresolved discrepancy regarding the scope of adoption. Bloomberg reported on July 1 that negotiations had not been finalized, and that Apple's plan was to use CXMT and YMTC products in products sold in the Chinese market while shifting supply from Samsung, SK Hynix, and Micron to products sold in the US. Three weeks later, the WSJ described the scope as "outside the United States." It is unclear whether the proposal expanded from China to other regions, or whether the sources simply described it differently. Apple has not disclosed which regions or products would be affected.
CXMT and YMTC do not even make the same components. CXMT's core business is DRAM, which retains data during active operation, and the company handles products such as LPDDR5X for smartphones and laptops. YMTC focuses primarily on 3D NAND, which retains photos and apps after power is turned off. In its quarterly report for the period ending March 28, 2026, Apple stated that supply constraints and rising component costs were occurring due to a DRAM and NAND supply-demand imbalance, and that it expected this trend to intensify. The two Chinese companies each address one of the two supply constraints Apple cited.
What Does an 84.6% Gross Margin Prove?
In Micron's fiscal 2026 third quarter, GAAP net sales reached $41.456 billion, with gross margin reaching 84.6%. This represents a sharp jump from 74.4% in the previous quarter and 37.7% in the same quarter a year earlier. According to the WSJ, Apple cited this gross margin exceeding 80% to argue to the administration that Micron was profiting significantly from the supply shortage.
That rising prices boosted profits is confirmed even in Micron's own materials. DRAM revenue was $31.3 billion, with bit shipments growing only in the low single digits from the previous quarter while prices rose in the low-60% range. NAND revenue was $9.9 billion, with bit shipments growing in the mid-single digits while prices rose in the mid-80% range. Micron explains that improvements in pricing and product mix drove the gross margin increase.
However, the 84.6% figure alone cannot determine whether illegal price manipulation occurred or what an appropriate level of investment would be. Micron recorded $7.1 billion in net capital expenditures in the same quarter. Data center revenue exceeded $25 billion, accounting for roughly 60% of total company revenue, but revenue composition is not the same as the allocation ratio of manufacturing capacity. How many wafers could have been redirected to Apple, and how many were actually shifted to AI customers, has not been disclosed.
There is a plausible pathway by which AI demand squeezes memory supply for general consumers. Micron has explained that high-bandwidth memory (HBM) requires an increasing proportion of manufacturing resources with each generation, further squeezing non-HBM supply. The company also notes that shifting NAND clean rooms to DRAM production suppresses growth in NAND supply. While Apple's concerns have a technical basis, this does not lead to the conclusion that Micron has unfairly restricted supply.
Even With a $250 Billion Plan, Supply Improvement Doesn't Begin Until 2028
On July 9, Micron announced plans to invest more than $250 billion in US fabs and technology through 2035. Its long-term goal is to produce 40% of its own DRAM domestically in the United States. At its site in Clay, New York, the company has completed its first concrete pour, and its Idaho fabs are scheduled to produce first wafer output in mid-2027 for the first fab and late 2028 for the second.
These factory timelines will not arrive in time to address the procurement problems Apple faces in 2026. Micron expects DRAM and NAND tightness to persist beyond 2027, with industry-wide supply gradually improving in 2028. Even so, the company says it cannot predict when supply will catch up with demand. The $250 billion investment serves as a policy lever to boost domestic production, but it is not an immediate remedy for reducing current product costs.
The shape of supply agreements has also changed. Micron has signed 16 strategic customer agreements, typically covering five-year periods from 2026 to 2030, addressing roughly 20% of DRAM volume and one-third of NAND volume. These are take-or-pay contracts that bind purchase volumes. Customer names have not been disclosed, so it is unclear whether Apple is among them. What can be gleaned from the disclosure is that Micron has locked in demand for these volumes through multi-year contracts—but specific pricing formulas or customer-by-customer allocations have not been revealed.
The Distance Between 1260H Designation and a Ban on Private Purchases
CXMT and YMTC are designated as "Chinese military companies" under the Department of Defense's Section 1260H list. YMTC is also on the Commerce Department's Entity List, meaning that exporting, re-exporting, or transferring domestically items subject to the US Export Administration Regulations (EAR) to the company requires a license, subject to a presumption of denial. CXMT carries the 1260H designation but remains at a stage where political pressure continues to build for its addition to the Entity List.
The 1260H designation alone does not currently make Apple's private-sector purchases uniformly illegal. On July 14, House Select Committee on China Chairman John Moolenaar and Representative George Whitesides formally called for CXMT's addition to the Entity List to be considered. They further requested that Secretary Lutnick use an executive order or departmental directive to ban procurement that would incorporate memory from designated companies into AI systems, data centers, federal IT, and similar applications. This is a letter requesting a new ban—it is not a rule that has already taken effect.
A separate timeline applies to federal government procurement. Section 5949 of the National Defense Authorization Act for Fiscal Year 2023 prohibits federal executive agencies from procuring electronic products or services containing semiconductors made by CXMT or YMTC starting December 23, 2027. FAR Case 2023-008, which would also cover commercial off-the-shelf products and small purchases, remains at the proposed rule stage as of July 26. The question of adoption in private markets should be considered separately from whether iPhones or Macs can be supplied to the federal government.
Apple has also increased its US spending and investment commitment to $600 billion over four years, and on July 8 signed a contract worth more than $30 billion with Broadcom. Micron's $250 billion figure represents fab and technology investment through 2035—since the timeframes and scope differ, the two amounts cannot be directly compared. Even so, both companies are positioned to lobby the administration as firms that would boost jobs and semiconductor supply chains within the United States. The conflict depicted by the WSJ is not only about whether Chinese-made chips should be permitted, but also about which company's US investments the administration should support through policy.
What will ultimately settle the policy decision are concrete measures announced by the White House or the Commerce Department. Whether CXMT is added to the Entity List, or whether new restrictions are placed on private companies' sourcing for products sold outside the United States, will change the conditions under which Apple could move its negotiations with the two Chinese companies toward actual contracts. The first wafers from the new Idaho fab are not expected until mid-2027 at the earliest, and Micron projects that supply-demand improvement will not begin until 2028. The key questions going forward are whether Apple can secure near-term sourcing options in the meantime, and how far the administration will extend its regulations on Chinese companies.